Klippel v. Borngesser

Rosenberry, J. The sole question raised here is whether or not the outstanding lease constituted an incumbrance within the meaning of that term as used in the warranty deed. The language of the covenant was: “And that the same are free and clear from all incum-brances whatever, except a mortgage of $1,800, . . . and that the above bargained premises in the quiet and peaceable possession of the said parties of the second part, their heirs and assigns, against all and every person or persons lawfully claiming the whole or any part thereof, they will forever warrant and defend.” In their answer the defendants alleged that there was a ■verbal understanding in regard to the occupation of the premises by the lessee, and that the lessee had agreed that if a suitable place could be found he would move from the premises. The court, however, found no such verbal understanding, but found that the plaintiffs had knowledge of the fact prior to the execution and delivery of the deed that there was an outstanding lease which would not expire until May 1, 1921, and that the lessee, Quaden, was in the actual, open, notorious, and visible possession of the premises. Under such circumstances was there a breach of the covenant against incumbrances? That a valid outstanding lease is an incumbrance would seem to be too clear to require argument or. for the citation of authorities, and it has been so held in many jurisdictions. Simons v. Diamond Match Co. 159 Mich. 241, 123 N. W. 1132; Demars v. Koehler, 62 N. J. Law, 203, 41 Atl. 720, 72 Am. St. Rep. 642; Porter v. Bradley, 7 R. I. 538; Brotun v. Taylor, 115 Tenn. 1, 88 S. W. 933; Mills v. Catlin, 22 Vt. 98. The authorities are also unanimous in support of the [426] proposition that an action for breach of covenant against incumbrances is maintainable when there is an outstanding term on lands conveyed, although its existence was known to the grantee at the time of the execution and delivery of the deed. Demars v. Koehler, 62 N. J. Law, 203, 41 Atl. 720; Brown v. Taylor, 115 Tenn. 1, 88 S. W. 933, 4 L. R. A. n. s. 309 and note. It is álleged that because the plaintiffs accepted the $30 per month from the lessee they thereby waived their right to claim damages for breach of covenant. The plaintiffs '■> are not disaffirming the contract, they are not seeking a rescission, but, on the contrary, are claiming under the contract. Their damages were the rental value of the premises during the time possession thereof was withheld. The payment of the $30 per month reserved by the terms of the lease merely operated to reduce the amount of the recovery and did not affect plaintiffs’ right of recovery. Plaintiffs were not entitled to receive expense of moving. In the absence of an allegation of fraud or mistake, the defendants should not have been permitted to show a contemporaneous oral agreement which in effect varied the terms of the deed. By the Court. — Judgment of the circuit court affirming the judgment of the civil court is reversed, and the case remanded with directions to reverse the judgment of the civil court and direct judgment for plaintiffs in accordance with this opinion.